Retirement For Life

The Big Beautiful Bill: What It Really Means for Retirees - Ep 38

• Christian Cyr, CPA, CFP® • Season 2 • Episode 38

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To get the full RFL experience, watch the episode here at https://youtu.be/CEgPwpYGQX0

The recent tax bill, retirement health vitality agreement, and the evolution of guaranteed income strategies present both opportunities and challenges for today's retirees.

• Trump's tax bill keeps rates low for the foreseeable future, preventing significant tax increases in 2026
• National debt concerns remain critical despite short-term tax benefits
• Consider Roth conversions now while tax rates remain historically low
• The "$6,000 deduction" for Social Security recipients benefits only some retirees, not eliminating taxes completely
• Nearly two-thirds of Social Security recipients already paid no federal tax on benefits before the new legislation
• Retirement typically improves emotional wellbeing but requires maintaining physical health
• Get your heart rate up for just 30 minutes daily to significantly improve retirement quality
• Half a billion people worldwide will be over 80 by 2025, making health maintenance increasingly important
• "Social Security 2.0" provides guaranteed lifetime income regardless of market performance
• Proper retirement planning must account for potentially living to 95 or beyond


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Intro:

Retirement for Life, your passport to a comfortable and confident retirement. The podcast that's equal parts education and entertainment, where we break down the retirement maze with a dash of fun and a heap of wisdom from your host, Christian Sear, CPA, the passionate retirement specialist and president of Sear Financial Wealth Advisors. The independent registered investment advisor specializing in the AIM retirement system.

Christian Cyr, CPA, CFP®:

Today on the Retirement for Life podcast, the three big things that happened this week in the world of retirement. That meant a lot to me and I think will mean a lot to you as well. Today I'm doing this on my own. My buddies are not with me. They're actually working hard and they said, Chris, you're going to do this on your own this week and I usually like my hand being held. But three things that I think will be interesting to you.

Christian Cyr, CPA, CFP®:

I'm going to start with the big, beautiful bill that was passed Trump's tax bill, Republican tax bill three important key takeaways from that bill. I want to say that, in the big picture, we've been doing a lot of work this year about the federal debt and if you've watched my videos or you know my mindset, the debt is just a big problem in this industry and really for the country and for retirees as well, and the interesting thing about this new tax and spending bill which came out is that it is in exactly the opposite position that the debt concern is. I am looking at a debt issue which is going to continue to spiral. I'm looking at a debt situation which is finally coming to rear its ugly head. We've been listening about the debt problem for years and it is truly at a point now where the cracks are starting to show. Where it's starting to, the cracks are starting to show.

Christian Cyr, CPA, CFP®:

The best analogy I can use is that the two states, Illinois and Florida. If you know about Illinois, in 1968, the income tax rate in Illinois was zero. Then it went up to 2.5%, Then it went to 3%, Then it went to 5%, Then it went to 7%. Now we have people they're thinking about going to 7%. Why? Because they just don't have enough money and sometimes people can't get it through their heads that you can only spend as much as you make and oppositely in the state. Well, let's stick with the state of Florida for. Or Illinois for a second. The governor, when asked tough questions, can't answer them. People are leaving the state. Last year, 200,000 people left the state. Um, the the people in the state of illinois that are creating jobs are leaving. Um, the people that maybe aren't creating or contributing to the economy are coming to illinois. The state is is dying a slow death. Okay, Michael Madigan ran behind the scenes the state of Illinois for 35 years from a political standpoint and helped in large part drive Illinois into the ground he's now serving most likely the rest of his life in a federal penitentiary for bribe and fraud and other things that he did to hurt the state. We've had four governors in the state of Illinois go to federal prison. We have counties in Illinois that are petitioning to become part of Indiana, and the list goes on and on and on.

Christian Cyr, CPA, CFP®:

Florida oppositely the state of Illinois has about 8,000 taxing local units of government. Oppositely, Florida has less than 2,000. Oppositely, Florida has a surplus amount and they have a 0% income tax rate. These two states are a great study on how to do things correctly and incorrectly. And right now in Florida, they're literally arguing over a surplus of funds and how they're going to give Florida taxpayers money back if they're going to drop their property taxes or drop their sales tax. These are two opposite, completely opposite pictures, and so, when it comes to a federal level, we are now at that point where the people elected in Washington are going to have to decide if they're going to go down the path of Illinois or Florida, and I'm afraid they're never going to change their ways.

Christian Cyr, CPA, CFP®:

But why do I bring all this up, besides the fact that it's on my mind? Because when we pass a bill like the big beautiful bill that we just passed that adds another $3 to $5 trillion of debt and extend low tax rates. From a long-term perspective, I think, oh boy, where are we headed as a country? But as a retiree, you should be thinking good, I get continued low taxes for at least the next two or three years before somebody finally sees the light and realizes that taxes are going to have to go up. Okay, so the mantra of Illinois is let's just keep doing this till we die. I hope that eventually in Washington DC, we see the light, because if we don't, we're going to have inflation go through the roof, we're going to have an erosion of confidence in the United States as really the pillar of the financial world, Okay, and the only way out of this is going to be higher taxes.

Christian Cyr, CPA, CFP®:

So for now, we need to make sure that we're aware that, although taxes will be low, I don't think this bill what they would say about this bill is going to generate and stimulate the economy. It's going to be a big beautiful bill and the economy is going to grow. New technologies are going to take place and we're going to see growth like we've never seen before, and that's how we're going to get out of this debt mess. The jury's still out, but I'm highly doubtful this will happen. So here are the big three things you need to know here in the Retirement for Life podcast that will impact your retirement, your personal financial situation. Number one as I said, good for you. Tax rates will stay low for the foreseeable future, which means in 2026, next year, your taxes are not going to go up by thousands of dollars, as they would have had this bill not been passed. Okay, but just think about this If your bill, your tax bill, was going to go up by thousands of dollars in 2026, and I just told you that's not going to happen, what do you think is going to happen 10 years from now? 11 years from now? Okay, this is number two about this bill Is this just a gift from Washington DC to get your taxes paid now as opposed to later?

Christian Cyr, CPA, CFP®:

If you're in your sixties, you haven't started your social security yet and your RMDs, your required minimum distributions, have not yet started. Now is the time to be thinking seriously about Roth conversion. You don't just jump into a Roth conversion. It's not right for everybody. Some people it's not right for them, but for people who can benefit from a Roth conversion, getting your taxes paid now, and this literally one of the lowest tax regimes we have ever seen in this country. Now is the time to do it, before taxes go up. But don't just jump into it. You have to make sure that all the I's are died and all the T's are crossed. Make sure that, before you do a Roth conversion, you have somebody who knows what they're doing and all the other things that come first are put into place before you do a Roth conversion. But let's talk about the third point, about this bill, about social security. You might remember Donald Trump saying this we will have big tax cuts for families and small businesses and we will have no tax on social security and no tax on tips. Okay, and you also. Here's another spin on the same thing, but I think this one's funny, so I wanted to play this one for you as well. Remember no tax on social security for seniors, no tax on tips, and I'm the only one that can do that. So when he says no tax on social security, I don't want to say he's lying. He's not lying, but he's kind of stretching the truth. Okay, there is still tax on Social Security. Yes, there is now a $6,000 deduction per person over the age of 65, which will help defray taxes on Social Security. Which will help defray taxes on Social Security. But we're still, in many cases especially the people we work with are still paying taxes on 85% of their Social Security. So just a quick, simple example If you are receiving $36,000 a year from Social Security, you know 85% of that was being taxed already, so about $31,000 was being taxed. When Donald Trump says no more taxes on social security, you would think that none of that's going to be taxed. No, he's giving you a $6,000 deduction. So, effectively, instead of $31,000 of your social security being taxed now, only about $25,000 is being taxed. You're still being taxed. Many people are still being taxed. Now, only about $25,000 is being taxed. You're still being taxed. Many people are still being taxed on their Social Security.

Christian Cyr, CPA, CFP®:

Here's some interesting things about Social Security that I think you should know about that I feel are interesting. Before this bill ever passed, two-thirds nearly two-thirds of Social Security recipients already were not paying federal tax on their Social Security. So he didn't do those 64% of Americans who are receiving Social Security that aren't paying taxes already on their Social Security. He didn't do those people any favors. For people who this will benefit on average, the White House says it's going to bring an extra $670 per person who are receiving social security. It's going to improve their tax bill by about 670 bucks. So if you are a married couple and you are both receiving social security and you are paying taxes on your social security, it could be said, according to the White House, that you're going to be about $1,400 better off because they're basically giving you this extra deduction of $6,000 per person. However, if you are like many of my clients and you're taking a required minimum distribution out of your IRA it's a lot of money and your income is already at a high level you're not going to get this $6,000 deduction. So if you're in a higher income bracket as a retiree, you're not going to see a benefit from this at all. So instead of saying to the masses during his campaign I'm going to have no more taxes on social security, what he really should have said is I'm going to help a minority portion of social security recipients by reducing their taxes by an average of about $607 a person. But for most of you people out there watching me on TV who are collecting Social Security most of you this is not going to help you at all because you're either making too little money or too much money. You're already not paying Social Security, or you're making too much money that my new tax bill is not going to help you. That's the deal on the new tax bill. It doesn't help the long term. The longer bigger picture that we should be more concerned about is the federal debt. This is probably not going to help that situation. In the meantime, take what you can get. Be happy that your taxes aren't going up, be happy that they extended low tax rates. Good for you. And if you are collecting Social Security, a minority of you will see a small benefit because of the new Social Security law that was put in there.

Christian Cyr, CPA, CFP®:

Now on to topic two. This week that's very interesting to me. I call this the Ret vitality exchange agreement. That's a mouthful Retirement vitality exchange agreement. I have a lifestyle practice. What's that mean? It means your financial wealth advisors rejoices when people retire. It is the number one goal we have. I don't like seeing people work longer than they have to Retirement. It improves your mental health. It improves your life satisfaction.

Christian Cyr, CPA, CFP®:

I always ask anyone I can talk to who's retired. I just had a golf outing the other day. Every single hole, every single person that came by. I asked them the same question, the same question. I asked retirees that have been asking for 10 years hey, are you happy that you're retired? 99.9% of people say absolutely. Why is that? Because studies find over and over again that people feel better when they retire compared to the people that they've left behind, who are still working at their workplace. Escaping work equals happiness.

Christian Cyr, CPA, CFP®:

So something happened this week. An article came out I want to share with you. You know, retirement promises you to give you happiness, but this is an exchange agreement. You retire, retirement gives you happiness, but in this agreement, yes, you're getting emotional health and happiness, but what is your end of the bargain as a retiree? Physical health, your physical health. Here's what I said back in episode 21 about this very topic. We cannot run away from sickness, we cannot avoid illnesses, but we certainly can do a lot, things in our power that can help us have a healthy retirement. And I said I pointed at the heart, right here, the ticker, and I said get the heart rate up 30 minutes a day. And I actually had a client just the very next day call me and say you inspired me. I said how? So when you said that I have to get my ticker just beating a little bit more for 30 minutes a day, she said I went on a walk today bit more for 30 minutes a day. She said I went on a walk today.

Christian Cyr, CPA, CFP®:

But in retirement, this is so critical staying healthy. Now you're not going to be out there running marathons, you're not going to be out there pumping 250 pounds on the bench press. But you retirees, you have to have to have to stay healthy. If you have a 25, 30-year retirement, you're not going to be out there. You can live this retirement in one of two ways, and I've seen people do it both ways An unhealthy retirement, where you're always going to the doctor, where you always have ailments, where you're, like myself, maybe a little overweight, not taking care of yourself. If you're going to be retired, you might as well make those 25 or 30 years enjoyable. Getting the heart rate up 30 minutes a day is definitely number one. Every day it can be going in the garden, doing a little strenuous activity around the house, it can be walking. Whatever you want to do to get that heart rate pumping, that is what you need to do.

Christian Cyr, CPA, CFP®:

On my channels, I've been very, very vocal about staying healthy in retirement keeping the weight off, keeping the heart healthy, making sure you do something every day, just 20 minutes a day, to get the heart rate up, and I can't say this enough. So for anyone listening to this, just hear me out this article that came out just last week. It says that a half billion of us will be over the age of 80 in this world by the year 2025. Okay, that is almost tripled from where we were just a couple of years ago. We are all aging and advancements are being made in the science of aging which are helping us live longer. Okay, and you will have to maximize the amount of years that are healthy, as opposed to the number of years in your retirement that are unhealthy.

Christian Cyr, CPA, CFP®:

Okay, if you have a 30 year retirement, wouldn't it be great to have 28 years of that retirement? Be relatively healthy and relatively active? Okay, and just have a couple of years where you have some bad health issues. Oppositely, I've seen it. I have too many clients and friends that they retire and their health starts to go downhill. You can control this, but that is bullet point number two that I want to share with you from this week.

Christian Cyr, CPA, CFP®:

Advanced aging is making us live longer. It is up to you in the retirement vitality exchange agreement. You are going to be given emotional happiness by retiring, but your end of the bargain is to stay healthy on your side. And with that let's go to the final and third thing that I want to share with you. That happened this week.

Christian Cyr, CPA, CFP®:

That impacts retirees. We're going to say goodbye to an old friend and it's a little bit sad, but you've now made an agreement, as we just talked about, to stay healthy in your retirement, and we now have to bring things back to the finance side. We just said it's crucial to have a realistic view of how long you might live, and more and more that's become longer and longer. It directly impacts how much you'll need for retirement, and underestimating this longevity is a common pitfall and essentially, the more years you have, it stands to reason, the more you need. Longer means you'll need to ensure you properly position yourself to maintain your lifestyle throughout retirement compared to previous generations 20, 30, 40, 50 years ago. Now I talk about this a lot longevity and it's not about fear, it's about preparation. So we use strategies that enhance retirement security.

Christian Cyr, CPA, CFP®:

Okay, they're critical, right, the AIM retirement system. One of the core tenants is income stability. So what am I saying? I'm saying for nearly a decade I used a term mailbox money to describe the solution we institute in most the majority of financial plans in the retirement system. I use the word mailbox money because I heard it somewhere one time. I don't remember where it was, but I did like it because it explains what we're doing perfectly. So mailbox money is a source of income that just shows up in your mailbox every month. It's a steady income stream for retirees which significantly increases income stability. Okay, it lasts as long as you and your spouse are both alive. It's guaranteed. So, whether you live to age 85 or 95 or 105,. I'll give you an example.

Christian Cyr, CPA, CFP®:

I just dealt with a client in Washington. He and his wife retired from Microsoft and they are going to spend about $8,000 a month in their retirement at least right now, forgetting about inflation for a second and their social security adds up to about $6,000 a month. So we determined that they need an extra give or take $2,500 a month. So we took $300,000 of his retirement nest egg and we turned it into mailbox money. He's going to be getting $32,000, $33,000 a year for the rest of his life. If he dies, his wife is going to continue to get $32,000, $33,000 a year, is going to continue to get $32,000, $33,000 a year. So the $300,000, if God forbid, something happens to this person and his wife they're on vacation, the plane crashes, their three children each get $100,000. So the $300,000 he did not throw away. The $300,000, though, is intended to give him money in his mailbox on a monthly basis for the rest of his life. So if he or his wife lived for 30 years to age 92, they will have collected well over close to a million dollars from a $300,000 investment. It's not an investment, it is a way to secure that income. So they don't care.

Christian Cyr, CPA, CFP®:

See, the market's been up 15 in the last 17 years, and sometimes we get a little lackadaisical and we forget about the lost decade from 2000 to 2010, where the stock market crashed and ultimately made no money at all. Okay, we need guarantees in our retirement, and so it's called mailbox money. Right Reduces your reliance on the stock market. So the money that's still invested in the stock market, when the market takes dip or crashes, a significant portion of your income, remains protected and guaranteed, which gives you more control unless we're in your retirement. It's part of what I call the perfect retirement.

Christian Cyr, CPA, CFP®:

Anyway, mailbox money what is it? It's actually people ask me all the time. They say, well, chris, you're talking about mailbox money, what is it? And I say, well, it's a fixed index annuity with a joint lifetime income benefit rider, and that's a mouthful right. So we had to make a whole podcast just to explain to people what mailbox money is.

Christian Cyr, CPA, CFP®:

But last week I received this this is a cease and desist letter that just showed up via certified mail and it said you cannot use the term mailbox anymore anymore. Apparently, this is sad. Somebody trademarked this terminology mailbox money back 20 years ago, in 2005. And they said you have to take down your videos that say mailbox money, or at least change the title of the videos. And then, of course, if you're on YouTube, you have a thumbnail, and so the thumbnail, as you're scrolling, you're seeing a picture of me and it might say mailbox money. We had to change all those thumbnails. So, anyway, we conferred with our lawyers and they said you should use Social Security 2.0. Right, because that also kind of gives the same feeling. Explains it without saying fixed indexed annuity with a joint income lifetime rider benefit. So anyway, we lost a friend this week and that is I cannot put mailbox money on any videos. On any videos. I can't put it on any titles, but anyway, that was a little thing on.

Christian Cyr, CPA, CFP®:

Now, what is called Social Security 2.0? Because we can't use mailbox money anymore, because somebody trademarked the words mailbox money. But regardless of what we call it, you want to make sure you have enough of it in case you live to age 95. So, sad to say goodbye to an old friend and hello to a new friend Social Security 2.0. Anyway, with that, I've been talking your ear off by myself, without my friends Emma and Andrea, probably for 20 minutes, hopefully less.

Christian Cyr, CPA, CFP®:

And today's Retirement for Life podcast, the big, beautiful bill. I don't know if it's big and beautiful, but for the long term it might be bad for the country, but in the short term it's good for you. Hopefully your social security is going to be taxed less and at least your tax bill is not going to go up next year. Be sure that you are getting the ticker beating a little faster than it normally does 20 minutes a day and we'll still use a fixed index annuity with a lifetime guaranteed joint income rider. But we won't call it mailboxing money anymore. We'll call it social security 2.0. But we won't call it mailboxing money anymore, we'll call it Social Security 2.0. It was a pleasure. I'm glad all of you joined me today and I look forward to the next one. Thanks for watching and listening to the Retirement for Life podcast. Thank you.

Outro:

Take care. Registered investment advisor. All content on this podcast is for information purposes only and should not be considered investment, legal or tax advice. Material presented is believed to be from reliable sources, and no representations are made by our firm as to another party's informational accuracy or completeness.

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Christian J. Cyr, CPA, CFP®

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Andrea Brannon

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Emma Bean, CFA

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